The rise of the first time buyer

It's a buyers' market according to Mortgage Broker Iain Macaulay SGD24906
It's a buyers' market according to Mortgage Broker Iain Macaulay SGD24906

Local estate agents are seeing a rise in first time buyers, while the Western Isles has come fourth in a list of affordable rural areas in the UK.

The islands came behind Copeland, Stirling and East Ayrshire taking a place at the top of the most affordable rural areas list, despite average earnings being the lowest in the top ten. Average house prices in the Outer Hebrides are 3.7 times yearly earnings, standing at £102,592.

The study, carried out by the Halifax, also shows the islands are ahead of most of the UK in terms of the number of first time buyers.

On average those taking their first step on the housing ladder made up just 40% of house sales in rural areas, however in the Western Isles this figure stands at more than half.

This is something that has also been apparent locally according to Estate Agent Ken MacDonald.

Mr MacDonald explained: “This year there has been a lot of young local people buying. While over the last two or three years there had been a shortage of young people.”

He continued: “There has always been affordable housing here, it is definitely one of the attractions of the Western Isles. Along with the beautiful scenery.”

The current market is also strong for those wanting to own their own home Mr MacDonald said. “People who bought between 2006 and 2009 are finding it difficult to get the price they paid.

“Lots of houses are available at the moment and sellers are open to negotiating on prices in many cases.”

The rise of the first time buyer has also been noticed by Mortgage Broker Iain Macaulay, who runs the Independent Mortgage Shop in Stornoway.

“First time buyers are 50% of my business, including people doing self builds,” explained Mr Macaualy.

He said he is now able to find lenders who will support self builds by lending in ‘stage payments’. “That was starting to get very difficult because more lenders were pulling out of the market.

“Self build is popular, it’s relatively easy to get land from family or inheritance. Now people are building again in their own rural communities, and once built people tend to stay in the house.”

He continued: “I’m not surprised the Western Isles is the fourth most affordable rural area. We didn’t have the boom up here to the same extent. It’s a more stable market here and there is more confidence coming through.

“We’ve always had an influx of people here because it is affordable. But now people who were doing that are suffering from the recession.”

He explained: “The luxury of buying a second home, holiday home or buy to let is not really an option any more. It’s turning into a buyers’ market here, which will benefit first time buyers.”

The introduction of the Help to Buy mortgage scheme this month, which has seen the Bank of Scotland and the Royal Bank of Scotland offer 95% mortgages, is also expected to lead to a surge of new buyers. Mr MacDoanld said he expects to see an increase because large deposits are often a stumbling block for many keen to buy - while Mr Macaulay said several people have already asked about the scheme.

However it might not be the only option for those struggling to save for a large deposit.

“The criteria is a lot stricter for this,” explained Mr Macaulay, “you might not pass a 95% mortgage but you could another mortgage.

“There are lenders out there that will fund you a 90% mortgage,

and lend you the 10% deposit as an unsecured loan. There are lenders that will do that if they assess that you can afford the repayments on both.”